U.S. Job Market Freezes as 150,000 Positions Vanish Amid AI-Driven Layoffs

October Layoffs Surge 175% Year-on-Year, Hitting 22-Year High
Over 30,000 Jobs Lost in Tech Sector Alone — Sixfold Jump From September
Tariff Fallout Weakens Consumption, Retail and Logistics Hit by Job Cuts

The U.S. labor market is entering a sharp downturn as layoffs soar to their highest level in 22 years. With mass redundancies sweeping across the technology sector, the combined impact of consumer slowdown from tariff policies and workforce restructuring tied to artificial intelligence (AI) adoption is fueling widespread job insecurity across the broader economy. As major tech companies including Amazon, Google, and Meta announce sweeping job cuts, concerns are mounting that the labor market contraction could persist.

Cumulative Job Cuts Reach 946,000 Through Q3

According to a report by Challenger, Gray & Christmas (CG&C) cited by CNBC on November 6, the number of layoffs in the U.S. last month reached 153,074 — a 175% year-on-year and 183% month-on-month increase, marking the highest October figure since 2003. John Challenger, CEO of CG&C, noted, “The recent wave of layoffs is something we haven’t seen since the 2009 global recession or the 2020 COVID-19 pandemic. It signals that we’re entering a new phase.”

CNBC attributed the surge to growing recession fears and cost-cutting measures triggered by tariff-related slowdowns. Between January and September, U.S. companies and institutions announced a cumulative total of 946,000 layoffs — up 55% from the same period last year, the largest figure since the pandemic. The leading cause was “worsening market and economic conditions,” accounting for 20% of total cuts. Trump’s tariff policy, which has depressed consumer activity, has particularly hit the retail sector, where layoffs tripled year-on-year, while logistics layoffs doubled.

AI-related workforce reductions are now accelerating across the technology industry. In October alone, 33,281 tech employees lost their jobs — six times the number recorded in September. The nonprofit sector, reeling from the federal government shutdown, reported 27,651 cumulative layoffs through October, a 419% surge from the same period in 2024. Bloomberg projected that the unemployment rate could rise from the current 4.3% to 4.7% as the Trump administration signals the potential for permanent public-sector job cuts following the shutdown.

‘Labor Hoarding’ Era Ends as Hiring Stalls

Early warning signs had already surfaced in July’s employment report. New jobs were initially projected to rise by 110,000 that month but came in at only 73,000, with May and June figures sharply revised downward. Hiring momentum has also slowed markedly. The Labor Department reported a hiring rate of 3.3% in June — lower than the 3.9% recorded in February 2020 before the pandemic, and well below the 4.6% peak in November 2021, when job creation rebounded.

At that stage, companies were cutting back on hiring but remained cautious about large-scale layoffs. The June layoff rate was just 1% of total employment, near the record low of 0.9% seen in 2021’s boom period. New unemployment claims, while edging up over the past year, remained relatively subdued. Economists characterized this period as one of “labor hoarding,” in which firms, wary of uncertainty, retained existing staff instead of expanding headcount, adjusting productivity internally.

The Wall Street Journal warned that “businesses are hesitant to fire workers en masse but are also reluctant to hire aggressively, leaving the job market stagnant. This equilibrium is extremely fragile — even a slight increase in layoffs or slowdown in hiring could cause a rapid deterioration.” Federal Reserve Chair Jerome Powell echoed this sentiment, saying that “labor supply and demand are both cooling, creating a curious balance,” and warned that “such an unstable state could quickly give way to crisis.”

Big Tech Enters Full Restructuring Mode

Analysts now warn that this wave of mass layoffs marks not a temporary correction but the onset of a broader structural downsizing. Major U.S. tech giants have already launched major cost-cutting drives. Microsoft alone has announced three rounds of layoffs this year totaling 15,000 employees. In January, it trimmed 1% of its workforce, followed by 6,000 cuts in May, and most recently another 9,000 — largely middle-management roles. Google reduced staff in its Cloud division in February and eliminated 200 jobs in its sales and partnerships units in May, part of its shift toward an AI- and data-centric operating model.

Meta, parent company of Facebook, has also slashed headcount across its core AI division. The company explained that the decision was intended to streamline decision-making and improve operational efficiency amid intensifying competition with OpenAI and Google. The restructuring includes layoffs of 600 employees from its Superintelligence Labs — the newly established AI research division led directly by Chief AI Officer Alexandre Wang. The cuts primarily affect infrastructure, foundational research, and product development teams. Following the downsizing, the unit’s total staff is expected to fall below 3,000.

Amazon has unveiled the most aggressive job-cut plan of all. Its robotics division announced a sweeping automation initiative that will replace up to 600,000 warehouse and logistics positions with robots by 2030, automating 75% of operations. The company plans to reduce its workforce by 30% through automation by 2027 as part of a long-term shift toward robotics-driven operations. The New York Times warned that “Amazon’s automation blueprint effectively marks the beginning of large-scale job displacement — and could serve as a model for companies like Walmart and UPS, with profound implications for blue-collar employment.”